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Accounting

(Impairment of Debt Securities)

Cairo Corporation has municipal bonds classified as available-for-sale at December 31, 2010. These bonds have a par value of $822,000, an amortized cost of $822,000 and a fair value of $760,350. The unrealized loss of $61,650 previously recognized as other comprehensive income and as a separate component of stockholders' equity is now determined to be other than temporary. That is, the company believes that impairment accounting is now appropriate for these bonds.

(a) Prepare the journal entry to recognize the impairment.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M9417781

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